Episode #266 – Turning Real Estate Investing Into Art with Frank McKinney, Part 1

You're listening to the REI marketing nerds podcast, the leading resource for real estate investors who want to dominate their market online. Dan Barrett is the founder of AdWords nerds, a high tech digital agency focusing exclusively on helping real estate investors like you get more leads and deals online, outsmart your competition and live a freer, more awesome life. And now, your host, Dan Barrett

0:39 All right. Hello, and welcome to this week's episode of the REI marketing nerds podcast. As always, this is Daniel Barrett here from AdWords nerds.com, where you can go to find more leads and deals for your real estate investing business using the wonderful magic of Google ads, Facebook ads, SEO and more. Go find that at AdWords nerds.com. Okay, ladies and gentlemen, I've got a man. Okay, so I've done a lot of interviews on this show. And you've heard me say many times before, you know, I'm really excited for this. For you to hear this interview, I think you're getting a lot of value out of it. And sometimes I'll even say this interview is wide ranging. But this folks I think is literally the most wide ranging interview I've ever done, because this week, I'm interviewing Frank McKinney. Now if you do not know Frank, I highly recommend that you go over to his website, which is Frank hyphen, mckinney.com. Or you can google Frank McKinney, he'll come up and you can see why they call him a real estate artist. And if you're a little bit like me, I kind of rolled my eyes at that initially because I was like, Okay, I get it real estate artists, okay. But folks, Frank is unlike any other real estate investor I have ever met. He is over the top. He is ambitious, he is flamboyant. He is deeply concerned with the aesthetic value of the work that he does. He is doing nonprofits, he is a best selling author. He is so many things. It is truly hard to wrap your mind around. And Frank is one of those people where I didn't know what I was gonna get when I started the interview. And I ended up just being totally charmed by this really incredible and unique person. So I'm super excited for you to hear my interview with Frank McKinney. Like I said, go check out his website, Frank hyphen, mckinney.com. And let's jump straight into it. Frank, welcome to the show. My friend, very happy to have you here. I

2:44 tell you what, I've been following your show for a while I've been on. I mean, I've been on Oprah on the cover USA Today. 2020. But I've never been on your podcast. This is something that I put at the top of my list. I can't wait to let you drive this bus for the next half hour. All right. Meanwhile, that means a lot to me. I very much appreciate it. And we were kind of talking a little bit before we hit record that there's like a million places this conversation can go. I will say like, people love to throw around the term renaissance man that will to like, say that you are like legitimately a renaissance man. Like, there's a million things we could talk about. So before we follow this, wherever it's gonna go. For people who don't know you aren't familiar with your work. How do you answer the question? What do you do? Like if you're at a cocktail party, and they're like, Hey, Frank, what do you do? How do you answer that question?

3:35 You know, it's really tough. It's, I start out by saying, you know, I'm a Christian. And we hear this thing often. You know, I'm a sinner saved by the grace of God. No, I'm a saint, who has been saved by the grace of God who still since that might disarm them for a minute, but what how do you make money on that, Frank? Well, I'm a corn fed country. Boy from Indiana. I grew up on a farm. I'm the oldest of six and went to four high schools in four years, I spent seven different stints in juvenile detention. I took a one way plane ticket and plane ride out of Indiana where I was 18 with a $50 bill and everything I could fit in a backpack, because I was causing my beautiful mother to turn prematurely gray, I was kind of ruining the family. They needed to get me out of Indiana. I landed in Palm Beach, you know, lifestyles of the rich and famous. And I I don't believe in the welfare mentality. I might believe in the welfare system. That's fine. You know, entitlement systems are they have an intended purpose, but the entitlement mentality is very toxic. So I was proud to have a job earning 180 bucks a week as a maintenance worker on a golf course. I then became a tennis instructor. After that I was earning 100 grand a year as a 21 year old teaching tennis I bought a Ferrari just for my tennis teaching days. I don't say that to impress anybody too, but to impress upon them that there was life after tooth mouth, juvenile detention. I went from that to you know, teaching tennis I earned my PhD and entrepreneurship and my masters in real estate in that I taught people who would drive up to their lessons and Ferraris and Lamborghinis and have the mansions. Have the yachts and they had the Beyonce local like wipe and they had everything I wanted for you young people imagine MTV cribs, three people my age.

It's lifestyles of rich and famous with Robin Leach. And I, they taught me that the way they were able to live the lifestyle they were living was real estate. They were not born real estate investors who are doctors, lawyers and mentors, but they took the discretionary income they had leftover and invest in real estate. So the long answer to your short question is I became a real estate artist. And that was a moniker that was given to me by Fortune magazine back in the late 90s. He might look like he can sing or play an instrument or sculpt or paint. But what he builds his three dimensional art on a sundridge canvas known as the Atlantic Ocean, and I ran with it. And so that's what I have done. No, I didn't start that way. Dan, I started by flipping crack houses before flip was even a word flip was a word used in gymnastics. It wasn't even a word used in real estate back in the late 80s. And I went from flipping and hundreds of little crack houses to building now 44 Direct oceanfront homes on speculation, meaning I don't have a buyer in mind when I put a shovel in the ground, with average selling price of 14 million. And aside from that, I'm a nine time soon to be nine times bestselling author in seven different genres. So that's kind of my I love writing, I would have had a I wouldn't have a 0.8 GPA instead of a 1.8 GPA out of high school had it not been for my ability to write. And then as a hobby, I'm an ultra marathon runner. I run races over 100 miles in length, I've run the toughest foot race in the world according to National Geographic, the Badwater ultramarathon 12 times. So that's how I would answer if you gave me that much time as

6:37 well. All right. So we were talking before we hit record, and we're like, oh, just kind of do free associate wherever the conversation is gonna go. So there's like a million things I want to ask about that entire journey. I wanted to start a little bit just by picking something that was in the beginning, which is this scene of you getting on a plane from Indiana, to California 50 bucks in a backpack? And I want to ask about that moment, right? Because I think, but my family, my family are all from South Bend, right? So they're whatever, I'm from India, they're all Indian folk. And it's great. You know, nothing wrong, right. But it strikes me that there are a lot of people who probably felt like you did, which is I want to get out of here and then never did, right. So there's something going on in that moment where you're like, I am willing to take a leap, get on the plane, leave with only a bag. Can you walk me through? Like why do you think you made that decision instead of Well, I'm just going to make the most of it here. Like one person was born in California, but Oh, Florida. Sorry, Palm Beaches. That's right. Okay. And there's a reason

7:46 why it was it was Florida. So the short answer is I it wasn't a choice. That choice was made for me. I just come out of juvenile detention. I just got kicked out of a boarding school in Colorado for troubled youth. I mean, I my parents were at their wit's end. So they said, We think it's a good idea that you go to Florida and you we might be able to help you get a job as a maintenance worker on a golf course. And we didn't just vacation in Florida, by the way, but like two weeks before and I had run away while I was on vacation, like I want it to be there was warm, there was beaches, there was girl holes that did look like farm, you know, farm hands, not going to India. I love Indiana, believe me. But when I left Indiana day, and it wasn't a place, I mean, it was not what it is today. I'm very proud of my roots, but it wasn't, wasn't happy to be living here in the mid 80s. So that decision was made for me. I remember kicking my backpack or my little duffel bag along as we're in the line. There's no TSA back then but in the line and get on the plane. Like I really didn't want to go with being forced just like I got forced to go to boarding school. But the only kind of silver lining was that golden lining which was the son that I was looking forward to getting back to this was January I remember when I left. Oh yeah. So let me pick up where I left off. When I get to Florida there was a girl I had met there, it was all going to be fine. I have this little job digging sand traps on a golf course and I'm just going to live kind of this vacation lifestyle. I never went back home I don't go back home to visit I go to the Indy 500 Every year, but I I think my parents thought I would be shocked into like scared straight I would go to a community college and it just born it was the land is the land of opportunity. And it happened for me it greater than I could have ever imagined it I don't think it could have happened anywhere else but Florida. Well, you

9:33 mentioned too that you ended up getting this job teaching tennis and making 100k a year which is insanely good money considering the time and what you were doing. How did you handle that transition? Because it strikes me almost as like, there's a lot of people who when they make money for the first time really go off the rails? What was that? Like? Were you like, immediately thinking like okay, How do I turn this into business and investing? And how do I grow this? Or was there like a learning period where you were kind of just shocked to have it at all? What was that experience? Like?

10:09 Yeah, remember 1.8 GPA. So I'm a simpleton. I'm a linear thinker. I'm not very bright. I went off the rails. Of course I did. I didn't know what I was doing. There's nothing. There's nothing extraordinary about coming to Florida with a $50 bill and a one way plane ticket. You really it's what happened after I hit the Land of Oz land of opportunity. And I, I started making that kind of money. Now what was off the rails was buying a Ferrari. That was ridiculous. It was basically everything I had saved. And you know, I couldn't use it for something else. And ultimately, I did sell that bar when it was time to buy my first crack house, and I use the proceeds. And some of the money. I save baking out there in the hot sun teaching dentists to buy that first crack house. It was the epiphany moment. I knew I was an entrepreneur back in Indiana, when it was it would snow and it would it would be like an ice storm. There'd be a steep hill and me and my buddies would go to the bottom of the hill when the cars couldn't get up to the top, we would help push them up. And we would wait for like $5 to begin it up. And when I made the cars up a hill, yeah. And then in Florida, there were some of these people when I was a maintenance worker, that you know that hey, you're Carlos little dirty, can I wash it? And they would give me the keys. I would literally take you to the carwash. Let the carwash do the work and they pay me 20 bucks. The carwash did cost me five. So I knew like I knew I was an entrepreneur then but but really where the light bulb went off, was when I came off that as a maintenance worker came off that golf course became a tennis instructor and saw the lifestyle that the people were living that I was teaching tennis to. And in that moment, I realized there was a limit. And the limit was about 100 grand a year. I mean, I have friends that are still tennis pros, 40 years later that are making maybe 150 grand a year. And I thought if if only I could get inside their minds and ask them the question. How did you get here? The problem Dan was they were 78 feet on the other side of the net paying me 50 bucks an hour.

And I've had eight or eight of them lined up for eight hours in a row almost every single day. And hence the money. You know, you can do the math, it's four bucks a date times, you know, during our days of the year, 250 days a year. It's it's 100 grand. Yeah. So I came up with this like conspiracy. It's in my very first book that came out about 20 years ago, that I would if you were my tennis student, and you were you know, Mr. Big Box and fancy car and beautiful wife and mansion and yacht. I would you pay me for an hour, but I'd tire you out after 45 minutes. I made sure you couldn't finish. Oh, and I just was dying to get in your head Dan if and I did that for two years to I will say hundreds but to dozens of tennis students. And that's where I earned my PhD in entrepreneurship and my masters in real estate, picking their brains 15 minutes at a time while I brought them a cold towel and you know, a cold drink at a towel. And that was when if I said oh my gosh, if you're living this way, because of your just the money leftover after you pay taxes and buy groceries and you know, pay for your house, you're making this interesting called Real Estate. And they taught me that was the way to go. And a few in particular said you should you should try the distressed real estate market for it. That's all I could afford. And I bought a crack house. My first crack house I bought was in 1986 for 36 grand. And from there we went did a bunch of those. Mind you, there was a five year learning curve. In the business of real estate Malcolm Gladwell references to be an expert at anything you got to put in 10,000 hours. Well 10,000 hours if you do the math, it's five years and I big I became an expert at the craft of real estate, not the business the craft of real estate, meaning sacrifice. Build your reputation first and the bottom line will follow.

Focus on your ROI or return on reputation and your ROI will follow. So my margins were compressed at the beginning because my crack houses were over improved. I mean, they were three coats of paint $25 yard carpet and brand new roof instead of patching the hole on a grass sod instead of grass seed. These were nice, and they sold for 103% of retail. That's where I got a taste of being a real estate artist. Did those did hundreds of those transactions for five years and then Dan I didn't do a house worth more than 100 grand for five years. And I jumped from $100,000 to 2.2 million because I had become the expert the craft it was no longer a significant risk to me like the biggest risk I ever took like the muscle exercising your risk tolerance like a muscle was coming off that dentists work and leaving $100,000 a year job behind. It wasn't a big jump for me to to go and by the way my margins went from 7% to 25% on $100,000 houses so the craft my expertise at the craft was getting better going to jump to 2.2 million was not a big jump at all.

14:52 And you use that jump that you're talking about from the $100,000 house to the $2.2 million house. Essentially what you're saying is the reason you were able to make that jump. It's almost like even when you were working on the $100,000 house, you were treating it like it was a $2.2 million house is that like you're helping a personal style like what what made the jump off? I'll tell

15:18 you how it works. So So I was perfectly happy doing $100,000 houses I never had, like these big dreams to do oceanfront homes. though. I was always having been a tennis pro, until I learned there was another life, I was happy doing credit cards until I realized I was really good at this craft. When I say crap, it's like, if Van Gogh Renoir Monet went to a paint store, and had to buy a palette and a brush and paint, would they buy the cheapest paint, they did it, they bought the best canvas, they bought the best paint, they didn't cut corners. And I, I didn't do that early in my career. And most at that price point, it's all about the bottom line. It's all about taking that spreadsheet and sees what falls and maximize what falls the bottom line, I was maximizing what fell to the bottom line of my reputation. That was my focus. And I found out later that the return on investment would follow. So so the jump really, it's almost like the the application I used in the last year of my $100,000 career with $100,000 houses, you put that application in an envelope, and you mail it, it's delivered by the same 37 cent stamp or 4039. Whatever stamps are nowadays 42 Step stamp, it doesn't matter the price point that what matters was me getting over any fear associated with the thought of taking that kind of risk. It's not the risk itself that makes you afraid it's the thought of taking the risk.

And realizing that it didn't matter. We just know zero. Listen, if I was doing if I was buying a house for 75 grand, and putting a coat of paint on it and flipping it for 100. What's the difference between buying and selling for 750 grand putting $200,000 into it and putting a $2.2 million price point on it? Yeah, that's how I saw it. And there was there was really, there wasn't I mean, I'm afraid every day of my life, let me call me quantify that or clarify that or state that I just don't let fear stopped me. Actually, I know when I'm afraid I'm feeling the sensation of fear. It's always associated with a thought of taking a big risk associate with a big change or challenge financial spiritual, relational dietary, what have you. And so I exercise that wrist muscles really small, but my risk tolerance is really is really strong. And eventually it became stronger and can withstand it could withstand greater pressure. Let's find motivated seller leads online but don't know where to start. Download our FREE motivated seller keyword report today, AdWords nerds have spent over $5 million this year researching the most profitable keywords for finding motivated seller leads. And you can grab these exact keywords when you download our report at www dot AdWords nerds.com/keywords.

18:01 Well, let me transition there because we started talking about ocean you know, you mentioned your oceanfront properties and stuff. And I really encourage people if you haven't been to the websites, Frank dash or you know, Frank hyphen, mckinney.com. And we'll have the links to it. But you can also Google it, you'll find it and you can go on their website, you can check out some of the properties that Frank works on these kinds of like ocean front really beautiful properties. You mentioned earlier that you know, you are you're kind of called this real estate artist. And it did really strike me that you clearly have a a point of view about what you're doing that is beyond what I think most investors have, right, there's clearly something you're trying to do with the properties that you work on. And I would love to kind of just dig on how you think about the term art when applied to what you do is what you do in art and like how do you approach it? Did you approach a property like any other investor? Are you thinking about it from an aesthetic point of view or above some insight into what your process is there?

19:05 No, we're gonna bounce around a little bit. But let's start with I, I see, I see so many real estate investors. Matter of fact, in a week, I'm talking to a big real estate investment club talking to hundreds of across the country. Most investors are bottom line driven. Okay, listen, I'm a businessman first and an artist a distant second, but I take an artist approach to the to the endeavor that might be contemplating meaning I can toggle back and forth I've trained myself to toggle back and forth between right brain and left brain and nanoseconds. And that's something that we don't have time to get into how to learn to do that. But I want you to understand that if you've been told your left brain or which is, which is a spreadsheet or a non creative, a business minded person, your whole life, you've been told that I guarantee you've been told you're one or the other. That's not true. My father was a banker. My grandfather was a fifth banker. So my I was left brain dominant. I was all a statistical analytical spreadsheet kind of mind. It took me a decade to wake up the right side of my brain so I could then toggle back Get forth between, okay, I want to build a house on the ocean that has countertops that are 14,000 years old lava countertops from France. And I don't want I want to walk when I walk in the front door, I don't want to walk on water, I mean, you're going to put in glass. And this is thick as your teller drive through teller glass. That's the artist side, then I would click quickly toggle back to the to the, you know, the spreadsheet shot to make sure it made sense. Yeah. So when it comes to, to the view of real estate, and even from $100,000, investor, to my biggest, most expensive house was a $50 million spec, starting with a 50 million or Smackdown. There's 50,000 people in the world, out of a population of 8 billion that can afford what I do for a living.

How often do you see at an auction, a painting from Van Gogh, Renoir Monet going for 10s of millions of dollars, because they were the artists, they approached what they did with their craft with with a way that no one none of the other starving artists did. And I didn't want to be a starving artist. I wanted to be a Van Gogh, Renoir Monet. So part of the branding and part of the approach to set myself apart first, and then attract to 50,000 out of a billion was was there is a method to the madness. I took that same approach to $100,000 house, and let me just dumb it down. I did over improve. I didn't make it thenicest on the blog. I didn't market it. Now maybe back then I'm wearing a pink gorilla outfit. I'm jumping up and down with an open house sign and putting mylar balloons on the chimney. But I still listen to this day. If you go to our website, which by the way PC magazine calls Disney on a desktop so there's there's something there for everybody. You will see our grand unveiling is are very theatrical. You know, I've jumped a motorcycle over a house and repelled out of a helicopter over the house. I've come off the back of a flaming jetski with took a veil like a piece of art unveiled an entire house once they're very theatrical. The reason that we do this is because I want the real estate brokers and the VIPs that are invited to pick up their phone and say, Yeah, I don't know about this guy pretending like he's Blackbeard rappelling down a zip line from one guest house to the other. It's kind of a neat show belongs on a back lot of Vegas, or maybe not even at all on Broadway. But you got to see the house. On the opening act for what you are, you don't mind me you don't mind my purple hair, you don't buy my funny clothes, you buy the house. And if I can get you there, step the hell out of the way and lit that front door open. That's where I've made my living. And people people big totally lose sight of you will use what hear me use the word the business real estate I was the crack, become an expert at the craft of real estate. And your your margins will will handsomely reward you.

22:50 So was the lesson that you kind of took and you've kind of applied over time or it seems like twofold where you're getting out there first is like one, you just like you said you treat what you do as a craft, you treat it as a craftsman someone who cares a great deal about the quality of the work that you do and the impact it's going to have on people right like I was really struck by you said you're you walked he walked in and you're walking on water, right? There's an aesthetic moment that you're trying to create there. People really remember, but you also understood it sounds like very young or very early, I should say that if you can't get anyone to look at it, it's not going to matter. Right? So what's the lesson that you're like you need both it's the craft has to be there because of the substances in there doesn't matter. But also, if nobody knows what you do exists, that doesn't matter either. So you have these kind of like theatrical elements which get people's attention but then you keep their attention with the attention that you put on the craft of what you do is that like the balance that you're trying to strike? You're

23:54 bringing up a really good point that is abroad of often enough so I mentioned nine books in my seventh book titled aspire, how to create your own reality and alter your DNA. It's my only mindset book. Only five chapters five sections there's a chapter in there that is titled healthy ego. Okay, so if I if we had all the time in the world, I see your talk talk to you about self esteem, you'd really tune in because self esteem is supposed to be a great like the minute I referenced the word ego it's it's it's villainized Yeah, prefix you just referenced them you didn't know you represent healthy ego is the following three things having other worldly burning passion for your purpose. In other words, being a real estate artist, I burned I bleed I sinful passion for it. Check off that box. Believing you're one of the best in the world at what you do. Like you, you you're a great podcast host. There's your one of the best Joe Rogan whatever whoever might be bigger, better, there is a third better than I am. But I had no I'm one of the best. Yeah, three and this is the one you referenced, not being afraid to tell the world about Got it. Most people if they're lucky enough to have that otherworldly burning passion for their purpose real estate and and believing kind of half heartedly that they're one of the best in the world at it won't tell the world about it. Well guess what? I need to be my own megaphone you need to be on megaphone your own rig master your own carnival barker, you don't PT Barnum, because your housing gonna talk for you. You know, you're not you're I'm Frank, you're Dan. We're not Apple. We're not coke. We're not Kleenex, we're on Nvidia. You know, those brands speak for themselves. We have to be the mouthpiece for our brand. So I realized that if I don't do that I'm not eating at Ruth's Chris Steakhouse. I'm eating out of a freaking dumpster. So I had to draw attention to our house.

25:41 Man. It's how I say this. Like this pack is so interesting, because people come on and you never really know where you're going to talk about. It always ends up being something that feels like it's talking directly to me. My life. Hey, guys, hope you enjoyed part one of this episode. It's just too good to limit one show. Join us next week to hear the rest

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